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You will note that some of the recent economic data below is a little less than… encouraging this month. Output, services and production are all just stumbling along. This may well mean that Q1 GDP figures (preliminary estimates due 27 April) come in even lower than the already-low 0.3% MPC forecast.

However, many of these figures are weather-related and, with luck, may just push production and output into the second quarter. The data may also put into question whether the MPC will vote to increase interest rates in May; almost all indications were that rates would rise by 0.25bps. However, consumer confidence, wages and employment figures have all come in much more optimistic, so the MPC may think that consumers can cope with the rise, despite the wider disheartening data.

There is growing evidence that progress on Brexit related issues and the agreed transition agreement over the last few months has lead to increased optimism and confidence in the business community. A recent Deloitte survey indicates that business confidence has edged up slightly with higher levels of optimism and less negativity surrounding the long-term effect of Brexit, all being noted. The CBI Business Optimism index also showed substantial positivity, jumping to 13 during the first quarter of the year, up substantially from minus 11 in the previous quarter. Concern over Brexit-related effects may have waned but they now appear to have been replaced with UK growth being seen as the primary headwind facing businesses going forward. With such a tight labour market (employment levels remain at historic highs) and skills shortages and recruitment difficulties still being cited across many sectors, it is easy to see why industry might be concerned about where growth will come from in the near term.

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